Question

a company is considering a new 6-year project that will have annual sales of $258,000 and costs of $162,000. the project will require fixed assets of $281,000, which will be depreciated on a 5-year macrs schedule. the annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52 percent, and 5.76 percent, respectively. the company has a tax rate of 40 percent. what is the operating cash flow for year 2?

Answer 1

The operating cash flow for year 2 is $93,568 with sales of $258,000, costs of $162,000 and the annual depreciation percentage of 32.00 percent in year 2.

Give a brief account on Operating cash flow.

The amount of cash created by a company's regular business operations is measured by operating cash flow (OCF). A company's operating cash flow indicates whether it can generate enough positive cash flow to sustain and grow its operations; if not, it may require outside financing for capital investment. The financial impact of a company's net income (NI) from its core operations is quantified by operating cash flow.On the cash flow statement, the first section is titled operating cash flow, commonly known as cash flow from operating operations.

According to generally accepted accounting principles (GAAP), either the indirect method or the direct method can be used to depict the operating cash flow section. When using the direct technique, the business must still carry out a separate reconciliation to the indirect way.

To solve the question :

Sales = $258,000

Less:

Costs = $162,000

Depreciation 89,920 = 281,000 × 32%

EBIT = 6,080

Less: Tax payable = 2,432

Net income = 3,648

Add: Depreciation = 89,920

Operating cash flow = $93,568

To know more about, Operating cash flow, visit :

https://brainly.com/question/21322525

#SPJ4